In Australia, our treasurer Scott Morrison still wants to reduce the corporate tax rate from 30% to 25%, mainly it seems because the US has reduced its rate from 35% to 21%. I commented as follows on Morrison’s Facebook page …

This is the greatest load of twaddle since climate change denial. There is no evidence that corporate tax cuts lead to growth and jobs. There are so many other factors influencing growth.

The UK has had seven cuts to its corporate rate in 10 years from 30% to 19% and its GDP growth is down to 1.7%. Its top personal rate came down from 50% to 45% in 2013. Its GST rate is 20%.

France’s corporate tax rate has been 33.3% since 2007. GDP growth has increased to 2.3% over the last year after being around 1% for a number of years. Its top personal rate went up to 50.3% in 2012 from about 46% and its GST rate is 20%.

Germany’s corporate tax rate has been 29-30% since 2008. GDP growth has increased from 1.8% to 2.8% over the last year. Its top personal rate is unchanged at 47.5% and GST is unchanged at 19%.

Canada’s corporate rate has been at 26-27% since 2012 after reducing four times from 31.4% in 2008. Growth fell to 0.3% in 2015. Growth is now up to 3.0% despite the top personal rate increasing from 29% to 33% in 2016. It has a social security rate of 14.4%.

The US corporate rate has been around 35% since the late 1980s and overall the economy doesn’t seem to have suffered. Add another 5% on average for state income tax. GDP growth is currently 2.3%. Top personal rate went from 35% to 39.6% in 2013. Social security rate is 21.3%.

Our corporate tax rate has been 30% since 2002 (average rate is 17% and effective rate 10.4%). But our GST is only 10%. Our GDP growth is up to 2.8% although it would be around 1% if federal government expenditure was reduced to equal revenue. Quite a few countries might have a corporate rate lower than ours but they have a much higher GST while personal rates are similar. GDP growth varies among countries but there doesn’t seem to be any correlation between tax rates and GDP growth rates.

Most countries have a large government debt, and tax cuts at this stage will make this worse. As a few commentators have suggested, tax cuts will be like a sugar hit. There might be some short term gains (including for tax havens, I presume) although these will be small and uncertain, but there will be long term pain, especially if there is another world downturn.

We don’t need to get into a race to the bottom with the US. Our investment from overseas grew 39% in six years under Labor and has continued to increase steadily. Trump met with his bankers in the 1990s when he was busy sending his casino broke. One of them said later that talking to Trump was like talking to someone who had skipped economics and accounting classes at college.

The main effect of a $48 billion tax cut for corporations would be to blow the deficits and debt out even further. There would be no guarantee that companies would invest more or hire more staff if they had a tax cut. Companies will only do this if there is an increase in demand for their goods and services. But with wage increases at a historical low and consumer confidence fairly low, it’s not going to happen. Besides, imagine the banks opening more branches and employing more staff if the banks paid less tax. There’s no way. The banks have made billions in profit for years, yet they close branches and lay off staff. The extra money from tax cuts would probably largely find its way into shareholders’ pockets and a fair chunk will probably be spent on additional overseas holidays (where the money of course leaves Australia) and on more investment properties (which would mean these people pay less tax, and the rich become richer and the poor become poorer paying ever higher rents).

There is no evidence that corporate tax cuts work. Indeed, the UK and Canada have reduced their corporate tax rates about half a dozen times in eight years but it hasn’t done much at all for growth. The US and Germany have kept their rates the same and their growth, if anything, has been better than the UK and Canada. If there was evidence that corporate tax cuts worked, then everyone would be doing it. GDP would grow and deficits would fall due to more tax revenue. It just doesn’t work like that. The only place it works is in the minds of the hard right.

It’s no use copying what Trump plans to do. Trump has no idea when it comes to money. When his casino got into trouble in the 1990s (largely due to Trump), the banks had a meeting and one banker was later quoted as saying that Trump didn’t know numbers and it was like he hadn’t taken any economics or accounting courses at college.

We also should keep in mind that the Coalition’s tax cuts policy is tax plan C. Plan A was to hike the GST from 10% to 15%. That was abandoned when the government realised that nobody liked the idea. Plan B was state income taxes. But that wasn’t popular either and was abandoned within days when it became clear that the idea was impractical and the states didn’t want a bar of it. Then we ended up with plan C: the corporate tax cuts plus cuts for wealthy individuals.

The Coalition government doesn’t seem to have much more idea than Trump.

Yesterday, an article appeared in The Conversation in Australia: ‘A flawed system delivered Trump victory – and now we brace ourselves for what’s next’. I wrote the following comment …

Yes, I think it was a flawed system that delivered Trump. It took 16 months to find someone that a minority of people voted for. If you win California or Florida or New York by one vote, you win the whole state. The system goes back to 1787 and is crazy in 2016.

Non-compulsory voting tends to bring out the right with their stronger views than those on the left, and also those with transport, the time and the physical mobility, which again tends to be those on the right.

The FBI is partly to blame, for bringing back the email saga and then once again deciding there isn’t a problem.

I think there is also a lack of education which sees people voting in a person with no idea about economics, budgets, climate change, government policy, or much else. It’s perhaps a cultural problem too. A lot of the thinking away from the east and west coasts is from the 19th century: Bible in one hand and gun in the other [or that’s the impression we often seem to get in Oz].

The polls got it right; people wanted Clinton. But the system gave them Trump. It’s anyone’s guess what will happen over the next four years as Trump is all over the place and doesn’t have a clue.